1. Coverage Gap Discount Program (CGDP) Payment Overview
Based on HPMS guidance issued Dec. 22, 2010 titled “Coverage Gap Discount Program Payment Process”
February 3, 2011

2. Agenda Introduce the CGDP Third Party Administrator
Review EFT information transmission
Review the two distinct CGDP payment flows
Discuss CGDP reconciliation
Discuss Quarterly Invoice process/reports

3. TPA Roles Under The CGDP
Liaison between Part D Sponsors and Manufacturers in ALL matters related to the Coverage Gap Discount Program
Coordinate notice to Manufacturers of Part D Sponsor Electronic Funds Transfer (EFT) information
Distribute quarterly invoices and associated reports to Part D Sponsors and Manufacturers
Process payment confirmation reports from Part D sponsors and Manufacturers
Confirm “Payment in Full”: Compare Payment Confirmation Report totals to Invoice Report totals; report any discrepancies to CMS

4. TPA Contact Information
All customer support will be provided through our existing Customer Service and Support Center (CSSC) located at Palmetto GBA LLC in Columbia, South Carolina
We will offer ongoing support by our dedicated staff through the CSSC Help Line at
Hours of operations - Monday through Friday from 8:00am to 7:00pm EST
Or send inquiries to our address at:
Web site address

5. Electronic Funds Transfer (EFT)
TPA distributes Part D sponsor banking information to the Manufacturers
Sponsor’s current EFT data stored in APPS will be used for CGDP
EFT information will be made available by the TPA to the Manufacturers via a mailbox on a secure server
The TPA will distribute this information to Manufacturers in mid-February

6. Medicare Coverage Gap Discount Program Agreement
Manufacturer’s Responsibilities
To pay quarterly invoices directly to accounts established by Part D Sponsors via electronic funds transfer
Confidentiality Provisions
Information disclosed to the Manufacturer pursuant to this agreement shall only be used for purposes of paying the discount under the Discount Program

7. Information Verification
Sponsors who would like to
Verify current APPS banking information
Verify the name of their banking info contact person
Contact :
Yvonne Rice at CMS
(410)
Sponsors who wish to use a different EFT account for CGDP payments may contact the TPA for further instructions

8. Identification of Funds Transfer
To identify payments from Manufacturers look for
Manufacturer’s company name
15 character identifier example: CGYYQQ8888H1234
CG = coverage gap
YYQQ = Year and Quarter of the invoice
8888 = P number without ‘P’
H1234 = Contract number
If this 15 character identifier is not visible on the bank statement or online contact your financial institution

9. Coverage Gap Discount Program Payment Overview
Part D Sponsors receive a monthly CGDP prospective payment from CMS
Sponsors advance the Gap Discount at the Point of Sale and submit PDEs recording the Gap Discount amount
CMS aggregates CGDP PDE data and sends to TPA
TPA sends quarterly invoice reports to manufacturers and Part D Sponsors simultaneously
Manufacturers pay the invoiced amount in full to Part D Sponsors
Manufacturers and Part D Sponsors send confirmation of payment to TPA
CMS offsets invoiced and now paid amounts from Part D Sponsors
After benefit year, CMS performs a cost-based reconciliation

10. Two Distinct CGDP Payment Flows
Prospective payment  CGDP Reconciliation
Manufacturer payment to Part D Sponsors of invoiced gap discount amount  CMS offset of invoiced amount
NOTE: The CGDP is a new program, separate from any existing rebate arrangements with manufacturers

11. Prospective payment  CGDP Reconciliation
CGDP Payment Flow
Prospective payment  CGDP Reconciliation

12. CGDP Prospective Payment
Monthly prospective payment for every non-LIS enrollee
13 months (last being any adjustments for previous year)
Allows plan to advance coverage gap discount at POS
Prospective payment necessitates a financial reconciliation

13. CGDP Reconciliation Cost-based reconciliation
Separate from Part D payment reconciliation
Takes place after the sixth invoicing and payment processing cycle for the benefit year
CGDP reconciliation is based on:
Submitting Contract – includes PDE data submitted by plan for Part D eligible beneficiaries even if not enrolled in plan
All accepted PDE data submitted by contract
Conducted at the contract/PBP level

14. Calculating the CGDP Reconciliation
Compares actual CGDP costs incurred to total CGDP prospective payments received:
Actual CGDP Costs – CGDP Prospective Payments
The reconciliation adjustment can be positive or negative
After the CGDP reconciliation for the benefit year:
CMS will discontinue additional CGDP offsets
Part D Sponsors will receive payment for invoiced CGDP costs from the manufacturer

15. CGDP Reconciliation Scenarios
Total CGDP Prospective Payments
Actual CGDP Costs Plan Advances
Manufacturer Reimburses
to Plan
CMS Offset of Invoiced Amount
CMS Owes Plan at Recon
Plan Owes CMS at Recon
Scenario 1
Prospective Payments are Less Than Actual Gap Discount Costs
$1,000
$1,750
$750 $0
Scenario 2
Prospective Payments are Greater Than Actual Gap Discount Costs
$250

16. CGDP Payment Flow
Manufacturer payment to Part D Sponsors of invoiced gap discount amount  CMS offset of invoiced amount

17. Quarterly Invoice Report Process Overview
Part D Sponsors advance Gap Discount at the Point of Sale
Part D Sponsors submit PDEs to CMS recording the Gap Discount amount
CMS aggregates PDE data and sends to TPA
TPA sends quarterly invoice reports to manufacturers and Part D sponsors simultaneously
Manufacturers pay the invoiced amount in full to Part D sponsors within 38 days
Manufacturers send confirmation of payment to TPA within 5 days
Part D Sponsors send confirmation of payment receipt to TPA within 5 days
The TPA sends payment confirmation statistics to CMS
CMS offsets invoiced and now paid amounts from Part D Sponsors through APPS

18. CGDP Timeline for Q1 2011 Quarter Number PDE Reporting Period End
Quarterly Invoice Distribution
Invoice Paid by
Invoice Payment Confirmed by
Payment Month of APPS offset
Q1 2011
3/31/11
4/30/11
6/8/11
6/13/11
8/2011

19. What PDEs Are Included On An Invoice?
Final action accepted PDEs w/reported gap discount received during a quarter
Certain PDEs may be pended from an invoice at the discretion of CMS

20. Defining “Final Action”
When Sponsor adjusts or deletes previously saved record, the most recent record saved is designated as final action record
Invoice excludes final action deleted records because they no longer have a reported gap discount

21. Quarterly Invoice Reports
Allows Sponsors to know how much they should expect and from which manufacturer
Sponsors will receive three reports from the TPA:
Sponsor Detail Report
Sponsor Invoice Report
A Gap Discount PDE Tracking Report
Sponsors will send the TPA one report:
Confirmation of Payment Report

22. Quarterly Invoice: Sponsor Detail Report Format

23. Quarterly Invoice: Sponsor Invoice Report Format

24. Gap Discount PDE Tracking Report
Released at the same time as other quarterly invoice reports
Allows sponsor to know which “final action” accepted PDEs with a reported gap discount were put on the invoice and which were not
Future enhancements to this report include adding a reason code explaining why PDEs did not get placed on an invoice

25. PDE Data Validation Website
When CMS pends Gap Discount PDEs and they require a Sponsor response, we will post them on the PDE Data Validation Website
Sponsors are expected to respond promptly to all PDEs posted to the Validation Website
The timeliness standard will be stricter for Gap Discount PDEs because they require a Sponsor response before they will be released to an invoice (response expected within 2 weeks of posting)
In the near future, CMS will initiate compliance action against Sponsors who fail to respond

26. Confirmation of Payment Report
Method for Sponsors to communicate to the TPA that they were paid in full, per the terms of the Manufacturer Agreement
Based on the Manufacturer Total rows from the Sponsor Invoice Report
Sponsors will add payment confirmation details to the records and transmit back to the TPA
Additional file format and process instructions will be forthcoming

27. CMS Offsets
Following the Quarterly Invoice cycle, CMS will offset Invoiced amounts from Part D Sponsors
Processed through APPS
For the Q invoice, offsets will be processed in the August 2011 APPS payment

28. Questions?
Please submit all questions regarding the CGDP Payment Process to our dedicated box